French Business Confidence and Consumer Spending Rise In May

French business confidence rose for the second month in May as record low interest rates and falling inflation appeared to be encouraging French consumers to start shopping again.. The Insee sentiment index - based on a survey among 4,000 manufacturers rose to 72 from 71 in April.

Consumer confidence also rose to a 13-month high, according to a separate gauge of consumer sentiment published today - it was up at minus 40, from minus 41 in April. The level is still, however, not far off historic lows.



French consumer spending increased in April as government incentives boosted car sales and slowing inflation helped cushion France's worst recession since World War II. Spending on manufactured goods rose 0.7 percent from March, when it climbed a revised 0.6 percent, according to the national statistics office Insee. The government offered a 1,000-euro car-scrapping incentive in December for buyers who junk old vehicles. Car sales climbed 3.7 percent last month, today’s report showed.

France's inflation rate fell to the lowest in at least 13 years in April. However, the number of jobseekers surged to 2.45 million in March, the highest in almost three months, and the government predicts a further increase as employers fire workers to survive the economic slump. France’s economy entered a recession in the third quarter and shrank 1.5 percent and 1.2 percent in the following two quarters, prompting the government last week to predict gross domestic product will fall 3 percent this year.